Rivals’ unfair advantage contributes to Royal Mail shares plunge

How are those super, soaraway Royal Mail shares doing? Not so soaraway. Priced at 330p at flotation, the stock hit 600p in January but touched 415p this week, the lowest they have traded. The market has had a serious rethink about prospects.

This does not mean business secretary Vince Cable was right all along about the Royal Mail’s valuation. The silliness of privatisation lay in the sale of 60% of the shares in one go. It would have been much better to sell in stages: slip out 20% initially and allow the market, rather than ministers and civil servants led by City advisers, to assess the right price.

That argument can be put on the shelf until Lord Myners offers a view in his report on privatisations in the autumn. The question now is why Royal Mail’s shares are falling so rapidly.

Three reasons are obvious. Competition has stiffened in the parcels market across Europe; Amazon in Britain is delivering more of its parcels itself; and Royal Mail’s GLS operation in France is one of several companies suspected of anti-competitive practices.